* SocGen closes long Brent oil position
* President Obama to address nation about Syria on Tuesday
* Market eyes Tropical Storm Humberto
* U.S. oil stocks likely fell last week, poll
(Adds details, updates to settlement prices.)
By Jeanine Prezioso
NEW YORK, Sept 9 Benchmark Brent oil prices
posted their biggest decline in nearly three months on Monday,
diving as much as $3 a barrel as new proposals to clamp down on
Syria's chemical weapons eased fears of an imminent military
strike against the country.
Oil prices fell despite a weaker dollar and rising equity
markets. Brent closed at its lowest price since Aug. 26, when
traders began building in a geopolitical risk premium attached
to the possibility of wider disruption in the Middle East.
U.S. oil futures, less directly exposed to Middle East
supplies than Brent, fell more modestly, narrowing their
discount to Brent by more than $1 to the smallest differential
in three weeks.
On Monday, Russia seized on a remark by U.S. Secretary of
State John Kerry to say Damascus should save itself by handing
over chemical weapons. Kerry had suggested Syrian President
Bashar al-Assad could avert U.S. strikes by surrendering his
chemical arsenal, but later said his remarks were rhetorical and
not meant as a proposal.
The White House said it would examine Russia's proposal to
place Syria's chemical weapons under interim control. Meanwhile,
Obama is struggling to convince Congress to approve a military
strike, while a new Reuters/IPSOS poll shows that American
opposition to such a move had risen to 63 percent.
"This has thrown some sand into the wheels of military
preparation in the U.S.," said Michael Lynch, an oil analyst and
president of consultancy Strategic Energy & Economic Research
Inc in Winchester, Massachusetts. "At the very least, it means
the debate is going to be stalled while we wait and see if it
There is a chance now that a U.S.-led military strike could
be "put on hold and possibly deterred altogether," Lynch added.
President Barack Obama will give a televised address to the
nation on Tuesday, making the case for intervention.
Brent crude oil for October delivery settled $2.40
per barrel lower, or 2.07 percent, at $113.72 a barrel, with
losses deepening to $113 in post-settlement trade. It was the
contract's largest one-day percentage loss since June 20.
Front-month U.S. crude oil futures settled $1.01 per
barrel lower at $109.52 a barrel, after trading as low as
Brent's premium to U.S. crude oil CL-LCO1=R settled at
$4.20, its narrowest close since Aug. 19.
French investment bank Societe Generale said it was closing
its long Dec-13 Brent position "as a U.S. military strike on the
Syrian regime looks significantly less likely and there appears
to be some sign of progress in resolving the Libyan crude oil
The global oil market has been coping with a loss of
additional supplies from Libya.
The decline in oil prices occurred despite some signs of
global economic recovery in China and Japan, which would stoke
"Economic news is pretty good, positive and bullish for
prices, but we're being overwhelmed by Syria," Lynch added.
The market was also eyeing Tropical Storm Humberto which
formed near the Cape Verde Islands on Monday and was expected to
strengthen into the first hurricane of the Atlantic storm
A hurricane could potentially pose a threat to the oil and
gas producing Gulf of Mexico, which accounts for 23 percent of
total U.S. crude oil production.
U.S. crude oil stocks likely fell last week by an average of
2 million barrels, a Reuters poll forecast.
(Additional reporting by Osamu Tsukimori in Tokyo and Ron
Bousso in London; editing by William Hardy, David Gregorio and